Geron Corporation (GERN) posted a net loss of 24 cents per share in the fourth quarter of 2010, wider than the Zacks Consensus Estimate of a loss of 19 cents and the year-ago loss of 20 cents. Fourth quarter revenues of $1.1 million were just above the Zacks Consensus Estimate of $1 million and well above the year-ago revenues of $0.6 million.
Higher expenses led to the wider fourth quarter loss. Including a $35 million charge related to the company’s agreement with Angiochem, Geron reported a fourth quarter loss of 59 cents.
Full year 2010 loss came in at 78 cents, wider than the Zacks Consensus Estimate of a loss of 71 cents but narrower than the year-ago loss of 80 cents.
Quarter in Detail
Revenues consisted of $272,000 in revenues from collaborative agreements and $826,000 in the form of royalties and license fees. Geron has several license agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies.
Total operating expenses were $25.7 million, 36% above the $18.9 million reported in the year-ago period. Research and development expenses increased 37.1% to $21 million.
Higher costs reflected costs associated with the phase II development of imetelstat and the re-initiation of Geron’s phase I study with GRNOPC1.
Imetelstat is currently in four phase II studies. While two large randomized phase II studies are evaluating imetelstat for the treatment of non-small cell lung cancer and metastatic breast cancer, two other studies are evaluating the candidate for multiple myeloma and essential thrombocythemia.
Research and development expenses should continue increasing with imetelstat being evaluated in four phase II studies. Moreover, Geron is looking to move GRN1005, which is being developed in collaboration with Angiochem Inc., into a phase II study in the second half of 2011.
The study will be conducted in patients with brain metastases arising from non small cell lung cancer and breast cancer. Another phase II study, in patients with glioblastoma multiforme, is expected to commence in the first half of 2012. Geron expects to present phase II proof-of-concept data on the candidate in 2012.
Meanwhile, general and administrative expenses increased 28.8% to $4.7 million mainly due to higher consulting costs and stock-based compensation expense.
Neutral on Geron
We currently have a Neutral recommendation on Geron, which is supported by a Zacks #3 Rank (short-term “Hold” recommendation). We believe that Geron’s telomerase technology platform represents a significant commercial opportunity.
The successful development of anti-telomerase therapeutics could very well change the treatment paradigm for several diseases including oncology and chronic degenerative diseases. While we are impressed with Geron’s technology platforms, we note that the company remains several years from achieving profitability given the lack of any marketed product in its portfolio and the early stage nature of its pipeline.
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